America first
International shares, as measured by the MSCI All Country World ex Australia Index (unhedged in AUD), rallied some +7.4% over the September quarter, and an impressive +21.1% over the year ended 30 September 2018. Leading the way, US stocks reached new highs, with the S&P 500 posting a 7.7% gain over the quarter, its strongest quarter since 2013. This is also up more than 14% since early February, when stocks fell sharply in reaction to worries rising US interest rates could abruptly end the expansion.
In the US, a remarkably buoyant economic backdrop (record low unemployment, multi-year high wage growth and rising consumer confidence) on the back of pro-growth government policies continues to benefit corporate profitability and encourage business investment. At the same time, US inflation remains fairly well contained despite the sharp pick up in oil prices, which supports the case for a gradual approach to future rate hikes.
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